A Patentability Requirement for Sequential Innovation
Volume: Volume 29, No. 4
Issue: Winter 1998
Pages: pp. 654-679
Authors: Ted O'Donoghue
Title: A Patentability Requirement for Sequential Innovation
Abstract: This article investigates patent protection for a long sequence of innovations where firms repeatedly supersede each other. Incentives for R&D can be insufficient if successful firms earn market profit only until competitors achieve something better. To correct this problem, patents must provide protection against future innovators. This article proposes using a patentability requirement -- a minimum innovation size required for patents. A patentability requirement can stimulate R&D investment and increase dynamic efficiency. Intuitively, requiring firms to pursue larger innovations prolongs market incumbency because larger innovations are harder to achieve, and longer market incumbency implies an increased reward to innovation.
JEL Classification
Intellectual Property Rights: National and International Issues patents, copyrights
(O340)
Management of Technological Innovation and R&D (O320)
Technological Change; Innovation; Research and Development: General
(6210)
Technological Change and Innovation (6211)
Research and Development (6212)